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A new historical narrative for “Needham Puzzle” and the modern Chinese growth miracle: The perspective of keju

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  • Shi, Xiangyu

Abstract

Why was China not the origin of the Industrial Revolution, but instead rose from imperial dynasties and experienced a growth miracle in the past four decades? We find that China’s imperial examination system (keju) plays a critical role in explaining the fall and rise of historical and modern/contemporary China. We find that keju significantly facilitates contemporary innovation and business creation by raising the contemporaneous level of human capital, shaping an innovative and productive culture, and fostering efficient institutions. In historical periods, keju misallocated top talents away from the scientific/technological sectors, leading to sluggish development during the Ming and Qing dynasties.

Suggested Citation

  • Shi, Xiangyu, 2025. "A new historical narrative for “Needham Puzzle” and the modern Chinese growth miracle: The perspective of keju," Economics Letters, Elsevier, vol. 255(C).
    • Handle: RePEc:eee:ecolet:v:255:y:2025:i:c:s0165176525003659
    DOI: 10.1016/j.econlet.2025.112528
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    References listed on IDEAS

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    1. Lin, Justin Yifu, 1995. "The Needham Puzzle: Why the Industrial Revolution Did Not Originate in China," Economic Development and Cultural Change, University of Chicago Press, vol. 43(2), pages 269-292, January.
    2. Bai, Ying, 2019. "Farewell to confucianism: The modernizing effect of dismantling China's imperial examination system," Journal of Development Economics, Elsevier, vol. 141(C).
    3. Ting Chen & James Kai-sing Kung & Chicheng Ma, 2020. "Long Live Keju! The Persistent Effects of China’s Civil Examination System," The Economic Journal, Royal Economic Society, vol. 130(631), pages 2030-2064.
    4. Yao, Yang, 2014. "The Chinese Growth Miracle," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 943-1031, Elsevier.
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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